The relation of life insurance to economics

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Part of The American Chamber of Commerce Journal

Title: The relation of life insurance to economics
Language: English
Source: The American Chamber of Commerce Journal Volume 8 (No. 11) November 1928
Year: 1928
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Fulltext: 20 THE AMERICAN CHAMBER OF COMMERCE JOURNAL November, 1928 Teach us, pray, your supplication For the bak&k of the harvest: Sikajo Bimaka-makak— The bakak of former ages! You who prayed and celebrated, Mandasakjoi inaakan— Please increase and make abundant All the feast to you we offer! "Tep iango y aduto— Here is food, and food delightful, You with us will eat this evening! Give us fortune, vouchsafe riches, That we mortals may more often To the harvest home invite you! ” A somewhat astounding detail of the ceremony Father Claerhoudt so poetically and vividly de scribes is the blessing of the very utensils in which the food was prepared: “The mambunung smeared cooked rice over the three stones on which the rice kettle had stood a-boiling, and proceeded: “ ‘Chakadan, because you carry On your head the heavy kettle Where our rice is put to boiling, Eat you first, for you deserve it— For you keep the embers glowing And the boiling rice from burning! ’ “Then the mambunung took another hand ful of rice and smeared it on the shelf that hangs above the fire, on which the villagers lay their rice bundles to dry”, and once more he cried out: “Sikam s6o ood&n pang-&nka— You too, shelf, where dry the bundles, Eat this food first! And your watching Over fire and food neglect not.” In the same way he blessed the mortar in which the rice is pounded free from the hulls, and then the feast began; and wine, rice wine, as straight from Mother Earth as wine may come, passed freely round the circle. Next day the village was deserted: “Each and all were in the fields, excepting the emaciated old mam bunung. All day .long he lay with his bony body stretched out in the refreshing shade of a mango tree near his hut. He alone was watch ing over the village, and his dim eyes longingly followed the brown figures stooping in the pad dies, that from the summit of the mountain descended to the river.” The moral laws of the Igorots are, of course, very rigorous. To despoil a village while the inhabitants were in the fields harvesting would be a capital crime. It would mean a job for the headhunters. The West Coast Life Insurance Company offers a full line of modern life insurance contracts designed to meet every need of business or personal protection. For particulars and quotations consult the Philippine Branch Office West Coast Life Insurance Co. Kneedler Building Manila, P. I. Telephone 2-36-74 The Relation of Life Insurance to Economics By Salvador Lagdameo, Insular Treasurer All modern treatises on economics contain chapters dealing with insurance. By this fact alone, it seems obvious that it is the consensus of opinion among economists that insurance is intimately related to the economic life of man which is subject to uncertainty. And it cannot be otherwise, because insurance is so closely The Insular Life Assurance Co., Ltd. MANILA, P. I. Low rates iberal conditions ocal investments oans on real estates repayable monthly instalments, at ow interest If a mindful man with a fixed salary dies, he will only leave a small saving to his family FOR ABOUT P31.00 ANNUALLY our company guarantees the payment of P 1,000 to your wife or sons in case of death, or to the insured himself if he survives the policy. Call or write for particulars to: HOME OFFICE C. S. SALMON 4th Floor, Filipinas Bldg. 3rd Floor, Gaches Bldg. Plaza Moraga, Manila, P. I. Escolta cor. T. Pinpin 115 P. O. Box 128 P. O. Box 734, Manila V. SINGSON ENCARNACION, President J. McMICKING, Manager linked with important human endeavors in the economic field that we cannot escape from its influence. It is a device which modem business method considers essential for the proper devel opment of industry and business, for it removes the economic consequences of uncertainty, lessening thereby the social costs of risk. Thus, it has been poetically designated as the "maiden of commerce.” Being a scientific scheme of taxation based on the law of averages to replace economic losses of almost every conceivable kind in so far as such losses may be reckoned in terms of money, insurance plays an important rdle in the world’s economic development. We insure against destruction by fire, earthquake, storm, lightning, against breach of trust by officials, marine accidents, theft, burglary, and many other casualties. We insure our own lives and against accidents and disability that may happen to us; we insure the education of our children, our old age, illness and un-employment. There is insurance against bad credit, loss of rent, strike, and crop failure. And there are com panies which issue policies on the voice of a prima-donna. A company in Russia has been insuring individuals against economic conse quences of political persecution. And who can tell what sundry risks will be insured in the near future to keep pace with the continuous and surprising progress the world is making in industrial capitalism? Already there has been a talk in England and America of insurance against divorce and against twins. The tremendous influence life insurance alone is exercising nowadays over the economic fabric of the world! An old adage says that “there is nothing sure in life but death,” and for an insurance company to exist there must be the element of uncertainty. This element is found, however, in the time of the occurrence of death or in the magnitude of deaths. What is, therefore, insured against is the time or magnitude of deaths by offering to remove the economic consequences of such uncertainty or, in other words, by replacing the monetary loss caused by the death of an indivi dual. Life insurance has developed from the stage of fatalism, when it was no more than an attempt to reimburse individuals for losses incurred, to the present modem one based on statistical data, tables of mortality and scientific calculation of premiums. In life insurance the net premium is the joint product of the theory of probabilities, the experience of vital statistics and a calculation of rates of interest. (Seligman). Modern life insurance with such scientific basis was bound to grow, it has grown and will continue growing. Its growth will naturally increase the rdle it plays in economics. A man who carries a life insurance commen surate with his income, cannot but feel at ease. He is not very much worried about his future financial condition. If he carries an endowment insurance he is providing for his old age, and for IN RESPONDING TO ADVERTISEMENTS PLEASE MENTION THE AMERICAN CHAMBER OF COMMERCE JOURNAL November, 1928 THE AMERICAN CHAMBER OF COMMERCE JOURNAL 21 his family should he die while the policy is still in force. Many policies carry disability benefits. An insured person is sure that his family will not be a burden upon society. In case of extreme financial distress before the policy matures, he can pledge his policy and get a loan on that security. He is, therefore, placed in a position where he can look toward the future with more confidence than he could otherwise; he becomes an optimist rather than pessimist or one who is indifferent. Such a man is obviously a valuable element in society because his tendency will necessarily be progressive, if not aggressive in the good sense of this term, and because he is more apt to be efficient in his undertakings. In fine, he becomes real force ready to join in the common task of producing wealth. The fact that he has to pay a premium or a tax at certain appointed periods makes of him a thrifty man and teaches him how to be punctual in meeting obligations. For life insurance is an agency for the assistance of the economically weak, an enterprise for the mutual good of the nation. This moral effect is so obvious and the conse quences that follow it are so clear that I need not speak at length about them. As to the social implications of life insurance, they have been wonderful and far reaching. The preventive work the life insurance com panies are now performing in order to meet social needs—their attempt to assist in the reduction of dependency and poverty caused by avoidable sickness, preventable accident and premature death. They are attempting to apply existing scien tific knowledge in the reduction of accidents and in the treatment of preventable diseases; they educate policy-holders in personal hygiene; they attempt to secure wise and sound health legisla tion; they work for the passage of laws ap propriating funds for better housing, partic ularly for workingmen’s homes, for loans for the construction of adequate water supplies, sewerage plants, better means of transportation and other forms of public utilities and necessities. Over forty-five insurance companies are offering periodic health examination to policyholders. You can understand the value of such periodic health inventory. The Metropolitan Life Insurance Company of New York studied 6,000 policy-holders thus examined and found out that there was a saving of 18% in the ex pected mortality. Some industrial insurance companies offer nursing service to policy-holders; many have published health literature to educate policy-holders in personal hygiene. A Japanese company, among other activities, is making a special effort to combat tuberculosis. The investments of life insurance companies consist of mortgage loans, stocks and bonds, policy loans, collateral loans and bank deposits. We Have The Largest and Most Complete Stock of Drygoods in the Philippines If you need silks, linens, cottons, or notions you can serve yourself best by choosing from our large stocks We also carry haberdashery, and make men’s suits and shirts Manuel Pellicer y Co., Inc. 44 Escolta, Manila Phone 2-11-06 The Peseta By Mrs. Lyle Martner It was beggars’ day in Malolos. The air was hot and steamy and the mendicants had been unusually insistent that morning, it seemed to me, as I sat on my shady veranda giving a centavo to each of them till I had exhausted my supply. Peoples Bank and Trust Company Manila, P. I. Branch at San Pablo Capital, Surplus and Reserves Pl,027,833.89 Acts as Trustee of Corporation Mortgages, Fiscal Agent for Corporations and Individuals, Transfer Agent and Registrar. Depositary under plans of reorganization. Acts as Executor, Administrator, Guardian, Trustee, Receiver, Attorney and Agent, being especially organized for careful management and settlement of estates of every character. Securities Held on Deposit for Out-of-town Corporations and Persons We Pay Per Annum on Savings Accounts 5% Per Annum on Fixed Deposits DIRECTORS N. E. Mullen, President Fred A. Leas, Vice-President Carlos Palanca, Vice-President W. J. Odom Francisco Ortigas W. Douglas, Treasurer Castor P. Cruz, Secretary They had .come by twos and by threes, in bunches and singly. First the old man who looked so comical with the short-legged stool strapped to him, ready for him to sit upon in stead of upon his heels; then the old woman with the coconut spoons and dippers to sell, but who expected a pittance whether or not she sold anything; and the old man who played badly a few tunes on a rather good violin, while the little boy who accompanied him sang; and lastly the old woman who had been burned and wore padded tennis shoes tied upon her crippled feet—holding out her stumps of hands. Somehow she was a little cleaner, a little more intelligent than the others, and so evidently considered herself an aristocrat of beggars that I never had the courage to give her the usual centavo, but just as one gives a larger tip when a haughty but efficient waiter serves one, so I always gave her an extra coin. She had so impressed the neighbors with her superiority that she had quite a rent roll where no other Wm. J. Shaw, Chairman of Board Julius S. Reese, Chairman, Executive Committee R. J. Fernandez, Vice-President Edwin Burke Emil M. Bachrach A. T. Simmie Ladislao Samson, Asst. Treasurer Nicasio Osmefia, Ass/. Secretary beggars ever dared go. I had just sent her away when Nell Westou came up the steps and exclaimed, “Why Edith! Aren’t you ashamed of yourself? You a^p encouraging them in begging from honest, hardworking people! Don’t you know that many of them are gathering money for hale and hearty sons and daughters who could support them in comfort?” It was so evident that she was quoting Mrs. Cadman that I could not suppress a smile, for Nell herself had been in the islands but a few weeks. “Yes, I know,” I answered, “but I don’t know who are the really needy ones and I have been taught that it is better to give to ten un worthy ones than to turn away one really hungry person. There are no homes or help provided by the government, and there’s but little organ ized charity, so it seems to me the fairest way is for each to give a little. It isn’t a very heavy tax after all.” “You are just encouraging them in laziness!” she snapped. “Really, it seems to me a hard way for some of these frail and crippled ones to get a living; surely they would rather work if they could,” I answered. “Then why don’t they work?” I laughed. “Sure enough! Will you give one of them work?” “How absurd you are! They could find work if they wanted it. Now I’ll go back to my work; for I don’t believe you would provide for me if I should turn beggar, so I’ll dig into those examination papers and earn my bread and butter.” “Just come around if you go in for begging and I’ll give you a double portion of bread—but no butter. However, according to my neighbors, I’ll be the one to go begging!” “You will have to earn all I ever give you. You can make me a pan of your delectable rolls right now,” she concluded, with a placat ing smile, and tripped down the road as peppy as the newly-arrived that she was. I had given a few more centavos which I found tucked away in my sewing basket, and a IN RESPONDING TO ADVERTISEMENTS PLEASE MENTION THE AMERICAN CHAMBER OF COMMERCE JOURNAL